GOP works to undo disclosure rule for oil companies abroad

SBM Offshore's Very High Pressure Swivel pushes reinjected water or gas downhole to increase well pressure and push hydrocarbons to the surface.

SBM Offshore's Very High Pressure Swivel pushes reinjected water or...

WASHINGTON - Republicans are moving to do away with a law aimed at preventing U.S. oil and mining companies from paying bribes to foreign officials to win business in resource-rich countries.

The legislation, awaiting a vote in the House, would strip the legal requirement that oil and mining companies report to the Securities and Exchange Commission how much they pay foreign governments in taxes, royalties and other fees, a provision within the 2010 Dodd-Frank Wall Street Reform Act aimed at reducing instances of bribery overseas. It would also end a yearslong legal battle over an anti-corruption regulation spurred by the Dodd-Frank law.

"The Trump administration is restoring regulatory balance by reining in Washington bureaucrats," said Rep. Bill Huizenga, R-Mich, who authored the legislation. "The SEC is rightfully refocusing its efforts on helping investors make informed investment decisions - as Congress intended it to - instead of imposing non-material disclosure requirements that only seem to push a social agenda."

Since 2010, the SEC's efforts to write regulations forcing companies to comply with the law have twice hit roadblocks, first when a federal court stopped a rule from going into effect after a challenge by the oil industry, and again earlier this year when the Republican-led Congress repealed an amended version of the rule under the Congressional Review Act.

Translator

To read this article in one of Houston's most-spoken languages, click on the button below.

Corruption around drilling and mining has wreaked havoc on economies in the developing world, where revenues from oil and gas fields can be difficult to track and easily diverted, and allegations of payoffs to government officials are rife.

Last month, Houston-based SBM Offshore USA, along with its Dutch parent company SBM Offshore, agreed to pay $238 million to settle criminal charges brought by the U.S. Justice Department related to bribery in Brazil, Angola, Equatorial Guinea, Kazakhstan and Iraq.

The transparency requirement in Dodd-Frank would bring the United States in line with other Western economies like Canada and the European Union, both of which require oil and mining companies listed on stock exchanges there to report on payments made abroad.

"If there's no transparency there's very little way for citizens to hold their governments accountable," said Isabel Munilla, an analyst at Oxfam America, a non-profit that advocates for reducing global poverty. "The evidence shows without this information you can't take a government to court. The money gets siphoned off by terrorists. It's been used by ISIS and the Taliban, and it goes into the pockets of corrupt elites."

The oil industry's chief lobbying arm, the American Petroleum Institute, has long fought efforts to institute the anti-corruption provision within Dodd-Frank, arguing it would force U.S. companies to disclose their financial arrangements abroad - something competitor companies abroad would be keen to see.

In 2012 the API, along with the U.S. Chamber of Commerce, sued the SEC to block the agency from implementing the regulation it had written to comply with Congress.

"The rule as written would impose enormous costs on U.S. firms and put them at a competitive disadvantage against government-owned oil giants not subject to the rule," API CEO Jack Gerard said in 2012.

They won that case, arguing the SEC, traditionally charged with protecting investors and regulating financial markets, did not have the authority to oversee anti-corruption disclosures - a legal point of view shared by others.

In 2013, Mary Jo White, the chair of the SEC during the Obama administration, said in a speech that while "seeking to improve safety in mines for workers or to end horrible human rights atrocities in the Democratic Republic of the Congo are compelling objectives ... I must question, as a policy matter, using the federal securities laws and the SEC's powers of mandatory disclosure to accomplish these goals."

For now, the SEC, is trying again to write a regulation that will withstand legal challenges. The SEC declined to comment, but its website says the agency working on amending the rule, with a deadline of Feb. 14. But the political winds in Washington are shifting against such anti-corruption measures.

Last month, the Trump administration announced it was pulling the United States from the Extractive Industries Transparency Initiative, a consortium that sets global standards on reporting government proceeds from oil and gas and mining in more than 50 countries.

And along with the legislation authored by Huizenga, which was approved by the House Financial Services Committee last week, a broader bill aimed at stripping down major provisions of Dodd-Frank also would repeal the anti-corruption measure. Named the Financial Choice Act, that bill passed the House in April and now awaits a full vote in Senate.

"Conducting American foreign policy is not what Congress created the SEC to do," Huizenga said. "With all due respect to the commissioners and the SEC staff, none of them are foreign policy experts."